Ministers are increasingly willing to spell out the importance of capital spending in face of criticism from economists that a simple determination to cut current spending will choke off recovery.

A succession of organisations, including the IMF, has pressed the government to bring forward capital spending.

On the health of the economy generally, Alexander said: "There are some signs of momentum starting to return to our economy. The UK economy grew by 0.3% in the first quarter of this year, more than was forecast by the Office for Budget Responsibility.

"Last year we became a net exporter of cars for the first time since 1975. And British exports of goods to emerging economies have increased since 2010."

He also said that public-service reform could achieve savings without reducing the quality of services.

In remarks aimed at the home secretary, Theresa May – one of the cabinet ministers holding out against big cuts to a departmental budget – Alexander said: "When we first came to office, we were warned that cuts to police spending would reduce police effectiveness.

"Instead, we've seen crime drop to its lowest level in 30 years. We were warned that cuts in the public sector would lead to nearly half a million job losses in the private sector. Instead, we've seen over a million jobs created in the private sector."

But in his strongest defence of UK membership of the EU, Alexander, a strong pro-European, warned that the recovery would be undermined by threats to leave the EU.

He said: "Arguing for Britain to leave the EU at this time is not just irresponsible, but damaging to jobs and Britain too.

"We shouldn't be debating leaving the EU, we should be leading it. We need to complete the single market, open up energy markets, make e-commerce borderless within Europe.

"Britain has never been in a better position to lead these changes. The eurozone crisis has forced many of the countries who used to be the biggest blocks on economic reform to see its advantages."